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Aer Lingus Moves One Step Closer to IAG Takeover
Aer Lingus appears to be moving closer to a full takeover by the IAG group. On May 26th, the Irish government agreed to sell their 25% stake in the airline. The government believes the sale to IAG, which also owns British Airways and Iberia, will benefit Aer Lingus in the long run. The transport minister for Ireland, Paschal Donohoe, says that the sale would be “best means of securing and enhancing Ireland’s connectivity with the rest of the world, and maintaining a vibrant and competitive air transport industry in Ireland.”
IAG made certain assurances with the Irish government over the sale. These include keeping the Aer Lingus brand and keeping the airline headquartered in Dublin. Also, Aer Lingus’s Heathrow slots, which are highly valuable, will remain under Aer Lingus’s control for the foreseeable future. IAG also hopes to be able to add 635 jobs to Aer Lingus and to Ireland by 2020.
The Irish government will make 335 million Euros as part of the deal and will retain a single share in the airline. The money from the sale would be used for a new connectivity fund under the governments Strategic Investment Fund. However, the sale cannot go through without Ryanair agreeing to sale their share in the airline. Currently, the European ultra-low cost carrier owns a 30% share in Aer Lingus. Ryanair so far has not received an offer from IAG and has refused to comment on the possible sale until an offer has been received.
The CEO of Aer Lingus, Stephen Kavanagh does not believe that the acquisition would result in redundancies or outsourcing of Aer Lingus jobs. However IMPACT, the Irish Municipal Public and Civil Trade Union, “maintains the view that the proposed takeover of Aer Lingus is bad for jobs, for Aer Lingus workers and for Ireland’s connectivity and economic development.” They also believe the assurances given by IAG give no real guarantee to keep Irish jobs in Ireland. However both IAG and the Irish government have reiterated that Aer Lingus will maintain consistent operations between major Irish cities and London. Furthermore, Aer Lingus will be provided with an enhanced network and better connections for passengers. IAG also reiterated their hope to bring more jobs to Ireland.
The Aer Lingus brand will remain for an indefinable amount of time. In order for IAG to dissolve the brand the government of Ireland would have to agree on a deal.
The possible takeover and the strategic position of the Emerald Isle on the fringe of the North Atlantic will help Aer Lingus to grow substantially. The new funds should help Aer Lingus as they could open up opportunities for new routes and new aircraft.
As part of the deal with IAG, Aer Lingus would rejoin the Oneworld Alliance. Aer Lingus was originally part of Oneworld from June 1st, 2000 until April 27th, 2007 when they left to refocus their business model towards providing low-fare service. By rejoining Oneworld, the Irish carriers’ passengers will have access to 17 airlines and routes to every continent except Antarctica.
Currently, Aer Lingus is the national carrier for the country of Ireland. Founded in 1936, they currently operate a fleet of 48 aircraft to 71 destinations in Ireland, Europe, North America, Asia, and Africa. They are the second largest carrier in Ireland behind competitor, Ryanair.
Despite sizable competition within the European airline industry, Aer Lingus’ future, in some ways, is increasingly looking brighter. With a possible IAG takeover in the works, one could pose the question, will Aer Lingus become one of Europe’s major carriers?
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